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Angel Bakeries announced this week it is acquiring 50 percent of Oranim Bakery, owned by Kibbutz Kfar Hahoresh. The kibbutz will lease the bakery building and grounds to Angel and give the company 50 percent of the bakery's shares. The deal requires the approval of the Anti-Trust Authority and banks holding liens on the Oranim Bakery.

Angel Bakeries CEO Gadi Angel said his company's collaboration with Oranim began five years ago and has gradually intensified. At first Oranim marketed Angel products in northern Israel, while Angel Bakeries did the same for Oranim in other parts of the country.

According to Angel, buying shares of Oranim is part of his company's strategy of collaborating with other players in the field. "Israel's bakeries are in real distress and small bakeries simply can't survive," he said.

Angel began merging with other bakeries in 1995, when it bought land in Lod and used it to build a state-of-the-art bakery. In 1997 Achdut Bakery merged with Angel and was relocated to the Lod facility, which produces 1,700 tons of flour a month. In 1999 Angel acquired the Tuv Ta'am Bakery in Netivot, whose monthly output of flour amounts to some 600 tons.

According to Gadi Angel, the Oranim Bakery produces 600 tons of flour per month and has an annual turnover of NIS 40 million. The merger, he says, will increase Angel's share of the baked goods market to 22 percent. Angel Bakeries also owns a subsidiary that runs its chain of bread and pastry shops.

Gadi Noy, Kibbutz Kfar Hahoresh's chairman for business affairs, views the deal with Angel as an important part of a general strategy intended to increase the kibbutz's means of production and improve the capital structure of both the kibbutz and its bakery. Kibbutz coordinator Eli Halutzi believes the deal will be highly beneficial to kibbutz members and improve Kfar Hahoresh's financial gains.

Angel Bakeries' market value is some $14 million, and the yield on its share price has been 50 percent since the beginning of the year. In the first quarter of 2001, Angel Bakeries made a net profit of about NIS 4 million, compared to NIS 3 million in the same quarter last year. Its shareholders' equity amounts to some NIS 70 million out of a total balance sheet of NIS 260 million.